Probate Tip: Is Your Bank Account POD?

You create an estate plan to protect yourself during your lifetime and to make sure your assets are passed on according to your wishes after you are gone. A well-crafted plan may include a will or trust, powers of attorney, and healthcare directives.

If you only have a will, your estate will likely need to go through probate – the legal process of distributing assets, paying debts, and closing the estate. In Illinois, probate often takes 6–12 months or longer if disputes arise. Fortunately, there are strategies to help your loved ones avoid probate. One simple option is designating your bank account as Payable on Death (POD).

 

What Does Payable on Death (POD) Mean?

When someone dies, even a surviving spouse may not immediately have access to their bank account. While adding a spouse as a joint owner is one option, another is to use a Payable on Death designation.

A POD is a beneficiary designation you add to your bank account. Upon your death, the named beneficiary can access the funds directly without going through probate. This can make an enormous difference to loved ones who may need access to money right away.

Most banks allow you to set up a POD free of charge.

Benefits of a Payable on Death (POD) Account:

• Provides immediate access to funds for your beneficiary

• Avoids the delays and expense of probate

• Reduces the risk of family disputes over money

• May reduce taxes owed on the estate

 

POD vs. TOD: What’s the Difference?

You may have also heard the term Transfer on Death (TOD). While both avoid probate, they apply to different types of assets:

• POD (Payable on Death): Used for cash assets, such as checking and savings accounts.

• TOD (Transfer on Death): Used for non-cash assets, such as stocks, bonds, and even real estate.

Both designations simplify the transfer of assets, but each works best in specific circumstances.

 

Why Work with a Probate Attorney?

While adding a POD or TOD can be a smart move, it’s not always the full solution. A comprehensive estate plan should address all of your assets, potential disputes, tax implications, and long-term care needs.

An experienced Illinois probate and estate planning lawyer can help you:

• Decide whether a will, trust, POD, or TOD fits your situation best

• Protect your spouse and family from delays and financial stress

• Minimize taxes and legal costs

• Ensure your wishes are carried out smoothly

 

Frequently Asked Questions About POD Accounts in Illinois

1. Can I name more than one beneficiary on a POD account?
   Yes, many banks allow multiple beneficiaries. You’ll need to specify how the funds should be divided, and each beneficiary will need to provide identification after your death.
2. Does a POD override my will?
   Yes. A POD designation takes priority over instructions in your will. If your will leaves the account to one person but your POD names another, the POD beneficiary receives the funds.
3. Are POD accounts subject to estate taxes?
   Yes, POD accounts are still considered part of your estate for tax purposes. They avoid probate but not estate tax liability.
4. Can creditors still claim money from a POD account?
   Yes. If your estate owes debts, creditors may have the right to claim funds in a POD account, even after it transfers to the beneficiary.
5. Do I still need a will or trust if I set up POD accounts?
   Yes. A will or trust covers assets that don’t have beneficiary designations and ensures all your wishes are legally documented. A POD is just one piece of a larger estate plan.

Talk to an Oak Brook Probate Attorney

Designating your bank account as Payable on Death can make life easier for your loved ones – but it should be part of a bigger plan. The Estate & Probate Legal Group helps families in Cook, DuPage, Kane, Kendall, and Will counties build estate plans that provide protection and peace of mind.

📞 Contact us today at 630-864-5835 to schedule a consultation and learn how we can help you protect your family.